According to the fourth Norton Rose "The Way Ahead" Transport survey - Where are you now?

A global survey of 1,000 plus respondents across shipping, aviation and rail

  • Asia Pacific ranks equal to Europe as the market of greatest importance to the global shipping sector.
  • London leads as the financial centre considered best able to meet the sector's financing needs (40%), followed by New York (15%) and Singapore (13%).
  • Increased financial constraint is highlighted as the most significant change to respondents' businesses between 2010 and 2012.
  • Shipping suffered more than aviation or rail between 2010 and 2012 - 34% of shipping respondents report a reduction in turnover against 22% of aviation respondents and 16% of rail respondents.
  • Fuel cost remains a key concern - 69% regard more efficient fuel consumption as the most important development focus for the shipping sector.
  • The perceived lack of debt financing has led to an increase in interest in other forms of finance, in particular structured finance, private equity and export credit.
  • 58% have sought to change their market position or geographical focus since 2010.

Asia Pacific has been ranked the geographical market of greatest importance to the global shipping market alongside Europe, each being selected by 39 per cent of global shipping respondents, according to international legal practice Norton Rose's "The Way Ahead" Transport survey - Where are you now?

However, London leads as the financial centre considered best able to provide for the shipping sector's financing needs, as ranked by 40 per cent of shipping respondents, followed by New York (15 per cent) and Singapore (13 per cent). Singapore is almost twice as popular with respondents from the shipping sector compared to aviation (8 per cent) and three times as popular than with rail (4 per cent).

The survey also indicates that shipping is the transport sector to have suffered the most in the wake of the global financial crisis. Over two-fifths (42 per cent) highlight increased financial constraint as the most significant change to their business between 2010 and 2012 and 34 per cent report a reduction in turnover during this period, compared to 22 per cent of respondents from the aviation sector and 16 per cent from the rail sector.

The shipping sector has also seen costs rise more than aviation or rail. Almost half (48 per cent) report that fixed costs increased between 2010 and 2012, compared to 43 per cent of rail sector respondents and 42 per cent of aviation sector respondents.

As a result, shipping is looking at a far wider range of funding options than the aviation and rail sectors. Over a quarter (26 per cent) of respondents are using or considering using structured finance for the first time and 23 per cent are using or considering using private equity for the first time. Indeed, 26 per cent of respondents from the shipping sector anticipate that private equity will be their primary source of funding over the next two years.

The survey also suggests that the cost of fuel is of greatest concern to the shipping sector. Over two-thirds (69 per cent) regard more efficient fuel consumption as the most important development focus for the shipping sector, compared to 64 per cent of respondents from the aviation sector and just 36 per cent of respondents from the rail sector.

Harry Theochari, Global Head of Transport, Norton Rose, comments:

"While shipping has suffered a torrid few years in the wake of the global financial crisis, facing immense pressure in terms of price, costs and funding there are now signs of renewed optimism emerging across the sector. That said, it is clear to us that shipping remains in a fragile condition."

Simon Hartley, Co-Head of Shipping, Norton Rose, says:

"Shipping appears to be in the greatest turmoil but positive strategies are being pursued in the face of very tough trading conditions, including the entry into new market segments and new geographical regions. Shipping is also, by dint of necessity, looking at alternative ways of funding itself, with the much talked about private equity continuing to be an option used and explored by a number of shipping companies."

Philip Roche, Co-Head of Shipping, Norton Rose, says:

"In line with the development of China and India as economic powers, Asia has been the most buoyant shipping market for a number of years. While London and to some extent New York remain key financial and legal service centres for the shipping industry, Singapore has successfully positioned itself as an increasingly important legal and financial centre for shipping and this trend will doubtless continue."

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